Macrovision Overview - SNL · 1,300+ employees worldwide • $420mm+ annual revenue • ~4000 patents and patent applications • Recent acquisitions - Gemstar-TV Guide

November 13, 2008

Copyright © 2008 Macrovision Solutions Corporation.

Macrovision Overview

Presented by Fred AmorosoPresident & CEO

2Copyright © 2008 Macrovision Solutions Corporation.

Who is the New Macrovision

• Headquarters: Santa Clara, CA- New York, LA, UK, Luxembourg, Japan, Hong Kong,…

• 1,300+ employees worldwide• $420mm+ annual revenue • ~4000 patents and patent applications• Recent acquisitions

- Gemstar-TV GuideWW Interactive Program Guides

- All Media GuideMusic, movie and game entertainment metadataMedia Recognition

- MediabolicConnected Platform

- BD+Blu-ray protection


What Is The Opportunity

• Provide infrastructure to the entire digital media “ecosystem”- Content producers- Distribution channels- Consumption devices

• Enable our customers to- Generate more revenue through differentiated products and services- Reduce cost of delivery- Reduce time to market

Every participant in the ecosystem can benefit from our solutions. No matter who wins, we can.


Primary Industries

ServiceServiceProvidersProviders

Description Solutions

Pay TV providers Cable, Satellite, & Telco providers, Mobile

- IP- Guidance (IPGs)- Connected Services (e.g., advertising, recommendations)- Entertainment Meta Data

Key Customers

CECEManuf.Manuf.

- IP- Guidance (IPGs)- Connectivity (DLNA) - Connected Services - Content Protection- Media Recognition- Meta data

Focusing on but not limited to providers of DTVs, Set Top Boxes (STBs), Network Attached Storage (NAS), as well as other media hosting and playing devices

Key CustomersSolutionsDescription

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Primary Industries (continued)

StudiosStudios(MPAA &(MPAA &

Indie)Indie)

Description Solutions Key Customers- Analog Copy Protection- DVD Rip Protection- Advanced Blu-ray Copy Protection

The creators of professional video content (e.g. TV, movies). Covering Hollywood/MPAA and independent studios

PortalsPortals

Description SolutionsKey Customers

Search engines, web retailers and other entertainment sites

- Entertainment Metadata- Media Recognition

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Home entertainment is undergoing one of the largest transformations since the

introduction of TV

• Causes disruption in entire entertainment industry• Old business models break• Users are more in control• New forms of product, distribution and

consumption all emerge

PhysicalMedia

DigitalMedia


Competition for the TV

• All battling to own the home TV experience• Each has to innovate and reduce pricing • Must deliver differentiated services

Primary Home Television

The more features introduced, the more competitors emerge

Cable

WebPortals

Satellite

TVManufacturers

Telco

OnlineServices


Competition for the TV

• All battling to own the home TV experience• Each has to innovate and reduce pricing • Must deliver differentiated services

Primary Home Television

Discover, Acquire, Manage and Enjoy

Cable

WebPortals

Satellite

TVManufacturers

Telco

OnlineServices


Macrovision’s Offering for TV-Based Services

TV-Based Services

Entertainment Metadata

Intellectual Property

Guidance PersonnelContent

ConnectedServices SecurityConnectivity

OnlineServices

Media Recognition


Macrovision’s Unique Position

• Macrovision is positioned to succeed through our unique capability

- IP & Entertainment Metadata- WW experience- Expertise in software and services

• The market is just hitting the growth phase

Time

Market Penetration

Today

High Growth Market

User

Adoption

We are attacking the market opportunity of a start-up with the resources, assets and market presence

of an established company


Safe Harbor Statement

All statements contained herein, as well as oral statements that may be made by the Company or by officers, directors or employees of the Company acting on the Company’s behalf, that are not statements of historical fact, including but not limited to any description of the Company’s or its management’s future plans, objectives, or goals, constitute “forward-looking statements” and are made pursuant to the Safe- Harbour provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, the Company’s estimates of future revenues and earnings, business strategies, and statements regarding the financial impact of, expected synergies and expected cost savings from, the transactions described herein.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results and/or from any future results or outcomes expressed or implied by such forward-looking statements. Such factors include, among others, the Company’s ability to maintain cost savings, the Company’ ability to pay down its debt through proceeds from divestitures, whether markets materialize as anticipated and customer demand for the Company’s technologies and integrated offerings. Such factors are further addressed in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2007, its Quarterly Report on Form 10-Q for the period ended September 30, 2008 and other documents as are filed with the Securities and Exchange Commission from time to time (available at www.sec.gov). The Company assumes no obligation , except as required by law, to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this presentation.


Agenda

Time Presentation Speaker8:30 am Breakfast9:30 am Kickoff Fred Amoroso - President and CEO10:00 am Demo Corey Ferengul - EVP Marketing

10:15 am IP Highlights Samir Armaly - SVP WW Patent Licensing

10:45 am Data Solutions John Moakley - EVP Data Services

11:00 am Service Provider Tom Carson - EVP Sales & ServicesSteve Shannon - EVP Product Management

11:45 am Lunch

12:45 pm Consumer Electronics Corey Ferengul - EVP Marketing

1:30 pm Financials James Budge - CFO2:00 pm Q&A

2:45 pm Wrap Up


November 13, 2008


Patent PortfolioOverview

Presented by Samir Armaly


Patent Portfolio Overview

• Macrovision has one of the world’s leading patent portfolios directed to digital media and related technologies

• Established by recognized pioneers in their respective fields, and includes fundamental patents in the areas of guidance and protection

• Unique asset providing:- Protection for Macrovision’s own technology solutions- Significant revenue through licensing third-party technology solutions- Runway for execution of product strategy


Patent Portfolio Overview

• Large, worldwide patent portfolio providing protection and opportunities for domestic and international growth

~2400 Issued Patents

~1570 Pending Patent Applications


Patent Portfolio Commercially Valuable

CE

System Operators

3rd Party IPG Providers

Online

Mobile

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Patent Portfolio Protection

• Patent portfolio provides protection for Macrovision’s own technology solutions:

• Competitive advantage when compared to most third-party alternatives


Guidance Patent Portfolio Overview

• Essential guidance portfolio – early, broad, fundamental

• Provides extensive protection and coverage beyond the traditional “grid”

• Platform and technology independent

• Domestic and International protection

• Integrated portfolio that is generally not reliant on one or a few key patents for success

• Portfolio often has multiple patents and patent applications directed to the illustrated features, resulting in both early priority dates and staggered expiration dates

• Breadth and depth of the portfolio makes attempted “design-arounds” difficult

Coverage for key digital media applications and functionality including: IPG, DVR, on-demand and advertising


Guidance Patent Portfolio Basic Guidance Features

Mini-Guide

Transparent Overlay

Quick Menu


Guidance Patent Portfolio Digital Recording

Dual Tuner

Transfer to Secondary Storage Device

Series Recording


Guidance Patent Portfolio Online Guidance & Video Search

Contextual Video Search

Rich Media

Localized Listings


Guidance Patent Portfolio Cross-Platform Functionality

Place-Shifting

Remote Recording

Integrated Video Guidance


Guidance Patent Portfolio Interactive Advertising

Program Promotion

Interactive Advertising

Targeted Advertising


Guidance Patent Portfolio Domestic

• Domestic guidance patent portfolio continues to exhibit steady growth

• Existing patent portfolio has led to successful patent licensing program

• New video platforms present opportunities for continued growth in patent licensing

• Continued commitment to new innovation


Guidance Patent Portfolio International

• International guidance patent portfolio has exhibited significant growth over the past 10 years:

• International portfolio growth has enabled parallel growth in international licensing business

• Opportunities for growth in patent licensing internationally remain- Expansion of System Operator licensing beyond Americas- Expansion of patent licensing into new territories

November 13, 2008


Data SolutionsOverview

Presented by John Moakley


• Entertainment Metadata is core to our solutions- IP + Metadata + Software = Unique Offering

• The stand alone data opportunity is growing- New interaction models, devices, and web locations all require

entertainment Metadata- Service provider and international opportunities are underpenetrated

• Macrovision well positioned- Combination of AMG and TV Guide entertainment Metadata results in a

unique position- Upgraded infrastructure to improve automation and flexibility

Entertainment Metadata

November 13, 2008


Service ProvidersOverview

Presented by Tom Carson&

Steve Shannon


Service Provider Market Makeup

Offer our IP, Metadata, Products & Services to subscription television Service Providers

SatelliteCable Telco Mobile

Representative Customers

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Our Customer Offering

Business Model• Operators pay monthly subscription fees• Agreements are typically 5-10 year terms• Ad revenue sharing

GuideData

InteractiveProgramGuides

ADSharing

Technology & IP Rights


Why We Succeed

• Exceptional feature and functionality rich IPG- Product continually evolving to meet customer and industry dynamics

• Rich data set to enhance the user experience- Evolving graphically rich navigation and data rich to enable recommendations

and usability for content discovery

• Investment in Guidance and resulting product and IP- Solid patent position to protect our products

• Operational Support- Experienced data network management & customer support


Video Subs & % Revenue By Territory Numbers in Millions

EMEA APACUS & Canada Latin America

8%

TV HHs 127

Analog Only HHs 26

Digital HHs 84

MVSN Subs 68

TV HHs 295

Analog Only HHs 57

Digital HHs 84

MVSN Subs 13

TV HHs 605

Analog Only HHs 209

Digital HHs 73

MVSN Subs 0

TV HHs 129

Analog Only HHs 18

Digital HHs 10

MVSN Subs 1

Approx 82mm subscribers licensed worldwideSources: SNL Kagan, Screen Digest, Macrovision. Macrovision subs are as of Q3:08, market data is 2008 forecast.

8%2%90%


North America

• Increasing digital penetration

• Contract Renewals

• Deployment of next generation products

• IPG advertising

0

25

50

75

100

125

North America Digital Video Subs

Cable Satellite F ixed Wireless Pay DTT IPTV

2008 2009 2010 2011 2012

Sources: SNL Kagan, Screen Digest

CAGR = 7%

Digital Video Subscribers Business Opportunities


Latin America

0

25

Latin America Digital Video Subs


2008 2009 2010 2011 2012


Digital Video Subscribers

• Native Guide Deployments• Increasing digital penetration• Deployment of next generation

products

Business Opportunities

CAGR = 24%


EMEA

0

25

50

75

100

125

150

EMEA Digital Video Subs


2008 2009 2010 2011 2012



•Patent Licensing•Increasing digital penetration•Deployment of next generation products

•Advertising


CAGR = 13%


APAC

0

25

50

75

100

125

150

175

200

225

APAC Digital Video Subs


2008 2009 2010 2011 2012



CAGR = 28%• Patent Licensing• Increasing digital penetration• Deployment of next generation

products• Advertising



Mobile


Worldwide subscribers expected to reach almost 250mm by 2012

Worldwide subscribers expected to reach almost 250mm by 2012

• Patent Licensing• Mobile Guide Deployments• Advertising

Worldwide Mobile TV YE Subscribers (Broadcast & Streaming)*

Source: ScreenDigest 2008* Includes Paying and Free-over-the-air year-end Mobile TV subscribers

0

50

100

150

200

250

2007 2008 2009 2010 2011 2012

Mob

ile T

V Su

bs (M

s)

NA EMEA APAC WW


Service Provider Product Roadmap Objectives

• Increase North American ARPU- Create a richer, more personalized experience by connecting our IPGs to the

Internet- Deliver next-gen user experience with focus on VOD & DVR- Enable quick deployment of tailored solutions- Deliver the leading tru2way IPG

• Advanced Guide Advertising- Bring the Internet display and search ad models to the TV

• Increase worldwide footprint- Enable easy conversion away from North American competitors- Expansion to international markets through porting to new platforms


Connected Services Value Proposition

• Entertaining & Informative Content- Delivers on consumer’s insatiable appetite to get closer to their

favorite shows & stars – fueling their passion for the in depth content that they love

• Personalized Guidance Experience- Consumers can personalize their guidance experience to follow their

current favorites and to help them discover new favorites

• Cross-platform Access- Gives consumers the flexibility to manage and remotely manage

their set-top box with features such as setting records remotely, bookmarking VOD titles, and customizing their channel guide


Flexible Suite of Connected Services

Metadata & Rich Media Listings, Broadband Data, Program Graphics & Previews,

Celebrity Info, Movie Data, Sports Data, Awards, etc.Opt

ion

1

Cross-Platform Web ServicesRecommendations, Remote Recording, Notifications, Hot Lists, Listings Delivery, Search, Advanced Guide Advertising, etc.

Opt

ion

2Opt

ion

3

MVSN IPG

3rd party IPGs Mobile

System Operator

Online IPG


Additional Applications for IPG Platform

Passport Echo’s advanced features and interactive applications are designed with our customer’s core business goals in mind:

• Revenue generation- ShowRunner VOD - iSubscribe- Harvest- Mosaic

• Customer satisfaction- Option rich intuitive IPG- CallerID- Weather - PassTime Games - PassTime Puzzlers

• Operational efficiencies- Webnostics- Remote Wizard- Bill View - iSubscribe


Macrovision Tru2way

• NA cable industry standard for next- generation guides

• High speed 2-way data communication enables next-gen features such as Connected Services and Advanced Guide Advertising

• Powerful hardware and application development capabilities will deliver much deeper experiences

• Reduces STB expenses for Service Providers


VOD & DVR Updates

• Video-on-Demand- Revamped navigation & grid

integration- Recommendations- Integrated search- Start-over- VOD “Bookmarks” from Web- Network DVR- VOD promotion

• DVR Enhancements- Multi-room DVR- Recommendations to record- Remote Recording from Web- External HDD expansion- DVR storage upgrades- User Experience Enhancements


Guide Advertising Overview

• Goal: Accelerate IPG advertising revenue by bringing the Internet advertising model to the television

- Add measurement capabilities- Improve ad experience with video and Interactivity

• IPG advertising rev share rights in place with ~100M IPGs worldwide• ~50M IPGs currently active with IPG ads• 15 to 20 average impressions per household per day (Source: MVSN

clickstream data)• New technologies will enable monetization:

- NA digital cable penetration = 36% (Source: Kagan) - NA DVR penetration = 40.3M households (Source: IMS Research)- NA VOD deployment = 97% of cable footprint (Source: DataAxis)

Begin IPG Ad measurement

2008 2009 2010

Establish ROI with Program Promoters & SOs

Increase guide traffic with enhanced

capability

Sources: Macrovision estimates


Advertising Today

• Advertising on both our SO and CE platforms

• ~50M Ad-supported guides in operation worldwide

- ~20M SO homes- ~30M CE homes

• Regional breakdown- NA Homes: ~25M- EU Homes: ~5M- Japan Homes: ~20M

Today advertising <$10M in revenuesSource: Macrovision estimates


Among new ad platforms available to buyers, the IPG offers broad reach and volume

• Widely deployed- ~50M ad-enabled IPGs WW

• Powerful reach and frequency- 89% of consumers say they enter their IPG every 30-60 minutes

• High loyalty and usage- 15-25 ad impressions / household / day (based on mvsn clickstream data)

• High awareness and engagement- 50% of users surveyed report seeing IPG ads weekly

• For program promoters- IPG usage time is the “point of purchase”

• For conventional advertisers- Heavily used interactive TV app

Source: Joint Lieberman study with Comcast July 2007


IPG Ad Capabilities: Key Success Factors

Measurability

Engagement

Measure every impression, click and action Measure every box

Enable rich two-way interactive ad experiencesGenerate leads, conduct commerce

Having more ads in rotationTargeting by daypart, geography, user profile

Makes platform credible (foundational)

Drives higher prices (value-added)

Targeting


Enhanced Ad Capabilities in 2009

i-Guide

CE V10.2

Passport


Revenue Benchmarks

• Internet-based ad models are gaining traction against traditional TV adsIndustry benchmarks

- $77B ‘08 traditional TV ad spend- 6% ’08 traditional TV ad spend growth- $24B ‘08 Internet/Interactive ad spend- 20% ’08 Internet ad spend growth- $1B ’08 program promo ad spend

• Macrovision revenue potential- Industry avg display ad price: $4- Industry avg inventory sell-through: 50%- Current ad-units average 15 impressions/day- Revenue potential: ($4 * 50% * 15 * 365)/1000

Sources: Jupiter Research and Macrovision Estimates

Implies $11 annual revenue per sub before revenue share


November 13, 2008


Consumer Electronics

Overview

Presented by Corey Ferengul


Explosion in CE Devices

How can consumers connect, discover, manage and

enjoy all the digital media available to them?

Major market changes equals a major opportunity for Macrovision


The Market Shift

• Macrovision estimates that by 2010 70% of TV viewers worldwide will watch TV at their leisure, not when broadcast, an increase from 25% in 2008. (Source: Nielsen, 2008)

• Macrovision estimates that in the next three years, 100 million homes will use multiple devices (e.g. TV, PC, mobile) for managing their digital entertainment portfolio and experience.

- Music, movies, photos, videos and television programs will become personalized catalogs that users will be able to search, access and expand at the touch of a button. (Source: Diffusion Group 2007)

Our goal is to be integrated with devices the consumers will be using


Impact to CE Manufacturers

• Changing business model- Ongoing revenue relationship with customers

• New technology expertise required- Connectivity- Software critical component- Services delivering content and other services to the device- Now concerned about content compatibility (e.g., DRM)

• Entertainment Metadata critical- Linkage with personal content and supporting guidance

• Must offer content ecosystem to compete- Cannot just be device of enjoyment, but must also be source of content and able

to share content- Extensive partnering expected

• Root of it all is they must still deliver linear TV viewing- A guide will still be the most used application on any device


Challenges for CE Manufacturers

• Complexity - Feature set- Partnerships- Support

• Speed• Missing:

- Discovery of content across - Connecting the user with the content


Our Approach

• Primary focus on Digital TVs and Set Top Boxes

- Secondary focus on Network Attached Storage and home gateways

• Modular, component-based approach

- Lead with Guide and integrate other products

- Address complexity with integrateable modules

• Solution oriented approach- Offer services enabling customers

to pieces together for them and getting them to market faster

GuideDNLA

Media

Recognition ConnectedServices


The DTV Landscape

• Competitive features are changing- Screen size and clarity is becoming commodity battle- Manufacturers must differentiate with value added features or risk getting commoditized- Mid market disappearing

• Key development areas- Getting connected- Creating new “operating” environments

Each has its own way to bring outside services into their device- Want to implement “over the top” capability

A focus on video

• WW shipments of DTVs increasing 13%+ a year (CAGR - 2008-2012)

(Source: Future Source Consulting, Global STB Report, 2008)


STB Landscape

• Set-top boxes - several distinct markets – each with different needs- Service Provider (NA cable/satellite, EMEA cable/satellite, IPTV, etc.)

STBs provided to a customer of a pay TV service – purchase decisions made by service provider

- Retail (EMEA FTA)STBs sold at retail – purchase decisions made by consumer

• STBs and DTVs trying to bring the web media experience to the TV- User generated content, media sharing

• Integration with personal content- Most major manufacturers now integrating with personal photos and music


Other Device Types Market Situation

• Gaming consoles implementing new media oriented capability fastest

- Already connected- Video download services, content sharing

• New devices gaining traction in bringing media to the home

- Residential gateways- Network attached storage- Connected Blu-ray players


Our Value Proposition

• Assist in increasing revenue per device

• Enable CE Manufacturers to create an ongoing revenue relationship with their customers (including offering advertising as part of on-screen guidance)

• Enable product differentiation• Reduce time-to-market with

competitive services• Increase our customers’ competitive

positioning when they compete with popular closed silo offerings

Revenue & Differentiation

Cost & Time to Market


Drivers for 2009 Product Investment

• Increase device penetration- Enhance products to gain new customers or geographies

• Increase advertising footprint & other alternative revenue streams

- Premium services

• Increase MVSN revenue per unit

- Via increased value and bundling of capabilities

One Guide Worldwide

N. Americas

EMEA

APAC


Macrovision CE Solutions

Create leading-edge products that connect with thousands of DLNA- and UPnP compliant devices to share and enjoy digital media.

Discover, recognize and identify content of any media type and from almost any media device.

Manage and enhance media with rich metadata, playlisting, and recommendation options.

Protect premium content across media types and devices.


Media Discovery - Guidance

Interactive Programming GuidesFind content and navigate programming

- TV Guide on Screen- Guide +- G Guide

Cross-Platform Tools and ServicesIntegrate multiple devices

- TV, recorder, mobile, online- Personalization and recommendations- Enhanced advertising platform


Media Connectivity

Connected PlatformShare media across devices

- Create standards-based networked products that enable content sharing

- Source Code SDK or turnkey media player and server solutions available

- Enhance IPG


Media Management

MetadataRich media information

- Industry-standard entertainment content

- Music, movies, TV, games- Data, editorial, schedules,

channels, clips, images

LASSORecognize media in CE devices

- CD, DVD, song, and text recognition- Networked or embedded option

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Expanding Capability in 2009

• New “guide” targeted for 2009 inclusive of broad set of MVSN capability

• Including:- Content services• Direct to device video download

- Premium and user generated content- Partnering for services - Advanced advertising

• Direct response and video ads

- Personal media• Photos, music and video


Macrovision’s CE Market in 2009

Worldwide Coverage – with Focused Markets

North America

EMEA Japan

Emerging OpportunitiesIndia, China, Australia, Korea

36mm DTV

36mm DTV 3.5mm DVDR

15.7mm Retail STB11mm DTV 4mm DVDR

Sources: GfK, JEITA, CEA, Management Estimates


North America

• ~5mm DTV in the US installed base with Macrovision ad enabled IPG• Sony is already shipping Macrovision IPG in a wide range - 55, 52, 46, 40 and 37 inch - DTV products

Manufacturers Shipping Our Technology

Source: Management Estimates

http://blogs.itworldcanada.com/insights/files/2007/08/cisco.gif


North America Market Opportunity

2008 2009

TAM 33 36

TAM Growth 23% 9%

SAM 5.7 7.9

SAM Growth 40% 39%

Total Addressable Market (TAM) = total devices shipped in a product categoryTotal Served Addressable Market (SAM) = Portion of the TAM we could sell into, i.e., units that carry IPG, DLNA connectivity or media recognition technologies

NA is primarily a DTV market

Digital TelevisionsDigital Televisions(Units Shipped in Millions)(Units Shipped in Millions)

Sources: US Consumer electronics sales and forecasts 2004-2009, CES,, Management Estimates


EMEA

• ~5mm Macrovision guides in the installed base on DTV and DVDR units

- ~2mm advertising enabled units in the installed base

• Countries of focus- Tier 1: UK, France, Germany, Spain and

Italy- Tier 2: Rest of Western Europe

• Other devices we cover:- Retail STBs from Philips, Humax,

Samsung, Siemens and Kathrein.

Manufacturers Shipping Our Technology in EMEA

Source: Management Estimates


EMEA Opportunity

Digital TelevisionsDigital Televisions(Units Shipped in Millions(Units Shipped in Millions))

Opportunity to license patents to SI Guide users or upgrade to product license

2008 2009TAM 33 36

TAM Growth

12% 10%

SAM 11.1 19.1

SAM Growth

50% 72%

2008 2009TAM 3.3 3.5

TAM Growth

6% 6%

SAM 2.4 2.7

SAM Growth

34% 13%

HDDHDD--DVDRDVDR(Units Shipped in Millions)(Units Shipped in Millions)

2008 2009TAM 14 15.7

TAM Growth

10% 12%

SAM 9 10

SAM Growth

20% 11%

Retail STBRetail STB(Units Shipped in Millions)(Units Shipped in Millions)

Sources: GfK, DisplaySearch, Management Estimates



Japan

• ~19mm Macrovision ad enabled guides installed in DTVs and DVDRs

• Mobile offering- ~29mm registered G-Guide users on

mobile phones

• Expanding device types & licensees

- Nintendo Wii- Yahoo Japan

Manufacturers UsingOur Technology


Japan Opportunity

Opportunity to license patents to SI Guide users or upgrade to product license

Digital TelevisionsDigital Televisions(Units Shipped in Millions)(Units Shipped in Millions)

2008 2009TAM 10 11

TAM Growth

24% 10%

SAM 10 11

SAM Growth

24% 10%

2008 2009TAM 3.5 4

TAM Growth

11% 14%

SAM 3.4 4

SAM Growth

11% 14%

HDDHDD--DVDRDVDR(Units Shipped in Millions)(Units Shipped in Millions)

Sources: JEITA, Management Estimates



November 13, 2008


Analyst Day Financial Presentation

Presented by James Budge


Non GAAP Information

Macrovision Solutions Corporation provides non-GAAP or Adjusted Pro Forma information. References to Adjusted Pro Forma information are to non-GAAP pro forma measures. The Company provides Adjusted Pro Forma financial information to assist investors in assessing its current and future operations in the way that its management evaluates those operations. Adjusted Pro Forma Revenue, Adjusted Pro Forma EBITDA and Adjusted Pro Forma Income from Continuing Operations and Adjusted Pro Forma EPS are supplemental measures of the Company’s performance that are not required by, and are not presented in accordance with, GAAP. The Adjusted Pro Forma information does not substitute for any performance measure derived in accordance with GAAP, including, but not limited to GAAP basis pro forma information.Pro forma financial information assumes the Gemstar and Aptiv acquisitions were effective on January 1, 2007. Pro forma combined company results also exclude Macrovision’s Software and Games businesses, which were sold April 1, 2008, and the results of the TV Guide Magazine, TV Guide Network, TVG Network and eMeta businesses, all of which have been classified as discontinued operations and are assumed to have been sold as of January 1, 2007 for aggregate proceeds of $350 million. The $350 million in assumed proceeds from the sale of the businesses classified as discontinued operations is assumed to reduce the debt issued in conjunction with the acquisition of Gemstar. Adjusted Pro Forma Revenues and Expenses further exclude the discontinued Hawkeye product line. Adjusted Pro Forma EBITDA is defined as pro forma operating income from continuing operations, adding back non-

cash items such as equity-based compensation, depreciation and amortization and items which impact comparability that are required to be recorded under GAAP, but that the Company believes are not indicative of its core operating results such as transaction, transition and integration costs, restructuring and asset impairment charges, discontinued product lines, insurance settlements and accrual reversals related to a former Gemstar CEO. Adjusted Pro Forma Income from Continuing Operations is defined as pro forma income from continuing operations adding back all of the adjustments used in calculating Adjusted Pro Forma EBITDA except for depreciation and adding back non-cash items (such as the amortization of debt issuance costs and the reversals of discrete tax reserves) and items which impact comparability that are required to be recorded under GAAP, but that the Company believes are not indicative of its core operating results such as impairment losses on strategic investments. Adjusted Pro Forma EPS is calculated using Adjusted Pro Forma Income from Continuing Operations.Reconciliations of Adjusted Pro Forma information to GAAP basis pro forma information are provided else where in this presentation.


Q3 Highlights/Recent Progress

Revenue grew to $112.2mmService Provider - up 17% from $39.2mm in Q3:07 to $46.0mm

– IPG to licensed pay-DTV subscribers grew 12% to 82mm (including 16mm int’l)

CE - $50.5mm despite difficult compare from large ACP deal in Q3:07– Device shipments in both ACP & CE IPG product lines grew double digits– VCR+ revenues declined as expected

Other - down 19% from $19.3mm in Q3:07 to $15.7mm– Data Licensing up double digit percentages; signed over 20 new customers– Entertainment declined as expected

Completed major cost-reduction/synergies/integrations actionsHeadcount actions completed, infrastructure migrations concluding

Cash and investments of $369mm, debt of $889mmNet debt of $520mm


Model Highlights

Annuity-type, IP-licensing business model; high-visibility, recurring revenue streamsRevenue is highly recurring

– Contracted revenue - governed by long term contracts stretching beyond 2015Guidance intellectual property and product licensing backed by patents

– Standards-based revenue – incorporated into industry standards such as DVD and Blu-ray

High operating margins - minimal variable costs, non-capital intensiveLow cost of sales – primarily implementation services in support of initial launch

Low recurring long-term R&D requirement inherent in patent licensing model– But making sufficient R&D investments in new products & patent prosecutions

Long technology lifecycles/high ROI – Adopted as standard, e.g., BD+, ACP– Each patent lasts 20 years from filing

Capital expenditures to trend downMajor infrastructure upgrades nearing completion

Proceeds from divestitures to be used to retire debt


Business Models

Verticals include subscription/fixed fee license options as well as variable pricingService Provider – primarily license operators guidance products and/or patents

Includes Digital Pay-TV operators & Online portals

Patent portfolio licenses (including IPG, DVR, interactive advertising, etc.)– Digital Pay-TV IPG licensees pay money/sub/month – Mobile – money/subscriber/month or on advertising share basis

Some services fees for development and installation of IPGs

CE – license to products, patents and servicesIPG, Connected Platform, Media Recognition, VCR+, mobile - money/device

ACP (primarily annual DVD license fees & set-top-box volume based royalties)

Other Entertainment – per disc copy protection royalties plus authoring fees for BD+

Data licensing – term-based subscription fees

Online Networks – advertising driven (paid impressions X CPM)

Primarily Royalty-Based Recurring Revenues


Adjusted Pro Forma EBITDA ($ in millions)

Adjusted Pro Forma Information

Adjusted Pro Forma Capex ($ in millions)1

$117$145

$185$20

$30

100

125

150

175

200

225

CY07 CY08F CY09F

$31

$15 $15

$5 $5

$0

$5$10

$15

$20

$25$30

$35

CY07 CY08F CY09F

• Blue areas equal low end of estimates, grey areas equal high end of estimates.

(1) CY07 includes $1 million from Macrovision, $34 million from Gemstar, less $4 million from discontinued operations

Adjusted Pro Forma Revenue ($ in millions)

Adjusted Pro Forma EPS

$0.52 $0.70

$1.25$0.20

$0.30

$0.00$0.20$0.40$0.60$0.80$1.00$1.20$1.40$1.60

CY07 CY08F CY09F

$409 $435 $460

$20$40

$200

$300

$400

$500

CY07 CY08F CY09F


GAAP Adjusted

Pro Forma Adjustments Pro Forma

Operating loss (2,265)$ $ - $ (2,265)

Equity-based compensation 12,420 12,420

Transaction costs 7,395 7,395

Restructuring and impairment charges 4,546 4,546

Discontinued product line (Hawkeye) 4,359 4,359

Non-recurring accrued expense reversal (10,700) (10,700)

Depreciation 16,661 16,661

Amortization 84,576 84,576

Adjusted Pro Forma EBITDA 116,992

Addback: Depreciation (16,661) (16,661)

Operating (loss) income (2,265) 102,596 100,331

Interest (expense) income and other, net (36,855) 6,770 (30,085)

Impairment loss on strategic investments (5,000) 5,000 -

(Loss) income before income taxes (44,120) 114,366 70,246

Income tax (benefit) expense (16,398) 33,166 16,768

(Loss) income from continuing operations $ (27,722) 81,200 $ 53,478

Shares used in computing diluted net earnings per share 102,100 783 102,883

Diluted (loss) income per share from continuing operations $ (0.27) $ 0.52

(1)

(2)

(3)

GAAP basis pro forma to Adjusted Pro Forma Reconciliation - 2007

Adjusted Pro Forma Macrovision Solutions CorporationYear ended December 31, 2007

(in thousands)


(in thousands)

(1 ) Eliminate non-cash interest expense such as the amortization of debt issuance costs(2 ) Tax effect pro forma adjustments at 29%(3 ) Additional shares needed for dilutive calculation due to positive income from continuing operations


As Reported to Adjusted Pro Forma Revenue Reconciliation - 2007

Revenue Lines: Source:IPG Patent Licensing 168,433$ Gemstar 10KIPG Products and Services 75,449 Gemstar 10KVCR+ 29,574 Gemstar 10KOther (inc. Mobile, IPG advertising, Data Lic.) 12,673 Gemstar 10KOnline Networks 13,212 Gemstar 10K

Gemstar (continuing operations) 299,341 Add Aptiv (pre-acquisition) 4,200 Pro forma adjustmentLess deferred revenue (52,700) Pro forma adjustment

Pro forma Gemstar revenue 250,841

Macrovision (continuing operations) 155,685 Macrovision 10KAdd AMG and BD+ (pre-acquisition) 15,756 Pro forma adjustmentLess eMeta (10,741) Pro forma adjustment

Pro forma Macrovision revenue 160,700 Pro forma combined company revenue 411,541

Less discontinued product line (Hawkeye) (2,841) Pro forma adjustment2007 Adjusted Pro Forma Revenue 408,700$


(in thousands)


(in thousands)


$9 $(6) $34$24 $6

$5

2007

Adj

uste

d PF

Rev

enue

SP CE

Oth

er

2008

Adj

uste

d PF

Rev

enue

SP CE

Oth

er

2009

Adj

uste

d PF

Rev

enue

Adj. PF CY07-CY09E Revenue Bridge

Note: 2008 and 2009 Adjusted Pro Forma revenue assumes midpoint of range.

Conversion of analog-to-digital,

annual price increases, and international penetration

IPG enforcement activities, increased device shipments of

IPG patent & product licensees,

& ACP-enabled devices, partially

offset by declines in ACP catch-up

payments & VCR+

•Increase in CPMs and uniques drives Online Networks growth despite late year advertising market weakness

•Growth in data licensing driven by new customers and annual price increases

•Offset by declines in ACP due to temporary loss of two MPAA studios and reduced pricing on bundled agreements

Conversion of analog-to-digital and international

penetration, expansion

internationally for product & patent

New products atop continued growth in

shipments of IPG & ACP enabled devices, partially

offset by significant declines in VCR+,

economic headwinds in CE IPG, and reduced catch-up payments

•Increase in CPMs and uniques drives Online Networks growth as advertising market stabilizes

•Growth in data licensing driven by new customers and annual price increases

•Growth in BD+ as new studios sign on, offset slightly by reduced DVD volumes for Independent studios as the market transitions to BD & online while MPAA business stabilizes due to recent bundled agreements

13% Growth 7% Growth3% Growth23% Growth (8%) Decline5% Growth

CE

$182

SP

$150

Other

$77

CE

$190

SP

$184

Other

$71

CE

$196

SP

$208

Other

$76


Long-Term Summary Drivers & Trends

Service Providers – to remain in expansion stageOperators – DTV subscriber growth, ramping international opportunityIPG Advertising – recent industry investment validates opportunity, scales in 2010Mobile – video launching & requires guidance

CE – higher IPG penetration, stable ACP, new products, reduced by VCR+, Economy, Fewer Catch-Ups

IPG - driven by market growth, partially offset by near term economic headwindsACP Embedded – majority relates to STBs (6% ‘08-12 TAM CAGR), minority to DVD (flat)

– Hardware licensing/VOD to continue to grow with STB shipments from analog-to-digital conversion– But run-rate reduced in 2008 due to catch-ups in 2007; growth should normalize in 2009 & beyond

Connected Platform – to benefit from IPG integrationMedia Recognition – leadership position in data licensing to extend into CE

– Design wins continue in 2009, volumes ramping in 2010; to benefit from IPG integration

VCR+ - to continue declining trend

Other – continued growth in Online augmented by synergies in Data & growth in BD+Online – potential for advertising revenue growth as traffic outpaces peers & syndication rampsCopy Protection – mix to shift away from ACP/RG & towards BD+

– ACP stabilized by signing multiple MPAA long-term, fixed price deals & augmented by BD+ growth

Metadata – comprehensive TV, Movies, Games, Music database to benefit from integration


Service Provider IPG Drivers

Growth will be driven by analog-to-digital conversion & international opportunitiesMacrovision has licensed most NA Digital Pay-TV providers; growth should track industry

– Of the ~127mm NA TVHHs, ~84mm are Digital Pay-TV (Source: SNL Kagan)

We believe our penetration will rise in a growing market– BSkyB, Sky Italia, Portugal Telecom – initial European deals – Of the 161mm Western European TVHHs, ~64mm are Digital Pay-TV (Source: SNL Kagan)– Asia, South America have even less Digital Pay-TV percentage share (Source: SNL Kagan)

Interactive advertising leads to opportunity after 2009

International IPG Licensing is Emerging While Domestic Growth Continues

Sources: SNL Kagan, Screen Digest, Macrovision.

Digital Pay-TV IPG TAM/SAM/SOM

0

50

100

150

200

250

300

350

400

450

500

2008 2009 2010 2011 2012

Subs

crib

ers (

mm

's)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Gro

wth

Rat

e

Total WW Digital Pay-TV Subs (TAM)

SAM (excludes pre-paid licensees)

Subs. Licensed by MVSN

SOM (subs. covered by paying operators)

TAM Growth Rate

Sources: SNL Kagan, Screen Digest.

(08E-12E)Digital Pay-TV Subscribers CAGR

North America 7%Latin America 24%EMEA 13%APAC 28%

While primary market segments

are slower growing (North

America & Europe), European

penetration is low as patent licensing is just beginning. Asia and Latin

America are more nascent and

include product lic. opportunities


Service Provider IPG Penetration

U.S. analog-to-digital conversion (Digital Pay-TV) to grow at 8% or higher until 2010Current penetration expected to rise as Europe and the Latin America drive growth

Latin America service provider revenue expected to grow based on Passport penetration

European penetration expected through patent licensing

International royalty rates are lower than those in North America

Sources: SNL Kagan, Screen Digest, Macrovision.

0

50

100

150

200

250

300

350

400

450

500

Subs

crib

ers (

mill

ions

)

NA MVSN IPG SubsRoW MVSN IPG SubsNA Digital Pay-TV SubsRoW Digital Pay-TV Subs

2008 2009 2010 2011 2012


ACP Embedded Opportunity

Total Addressable Market (TAM) = total number of STBs & DVRs shippedMarket research forecasts TAM unit volume CAGR of 6% from 2008 to 2012

Share of Market (SOM) = number of devices shipped with ACP embeddedOnly includes devices subject to variable per unit fees (primarily STBs); excludes DVD players/recorders

ACP for hardware was approximately $90mm in 2007 (majority from STBs)Minority from annual license fees from DVD player/recorder manufacturers

2007 included large catch-ups relative to 2008; we expect reduced catch-ups going forward

We assume ACP for hardware run-rate grows less than the STB market growth rateYTD ACP enabled device shipments have risen 20% but expect market rates going forward

Sources: ABI, Macrovision.

Note: TAM excludes retail PCs or other devices with analog outputs subject to variable royalties. 2008 shipment forecast based on annualizing first half data.

ACP TAM/SOM

0

50

100

150

2007 2008 2009 2010 2011 2012

TAM

& S

OM

Uni

ts (M

's)

ACP TAM (DVR + STB)

ACP SOM (ex. DVD Players)

Versus last year, the TAM is forecasted to

grow about 5% but our shipments are up 20%

YTD as we have expanded the devices

and companies we license


CE IPG Opportunity

Total Addressable Market (TAM) = total number of DTVs & DVRs shippedMarket research forecasts TAM unit volume CAGR of 16% from 2008 to 2012

Share of Market (SOM) = devices shipped with Macrovision IPG or patent licenseMany DTVs today do not include IPGs, creating opportunity for above trend growth

Push toward STB/networking functionality embedded in DTVs, e.g., VOD services, FTA, tru2way

Sony, by comparison, has publicly stated 90% of its devices would be connected by 2012

CE IPG was approximately $55mm in 2007 and is on track to be up substantially in 2008Shipments up 55% 1H:08

2009 industry TAM growth estimates do not reflect economic weakness; we assume CE IPG will grow slowerExpect above trend revenue growth post-2009 as economy recovers, plus IPG advertising rises

Sources: ABI, Macrovision.

CE IPG to Lag TAM Growth Near Term But Reflect Market Trends Long-Term

CE IPG Worldwide TAM/SOM

0

50

100

150

200

250

2007 2008 2009 2010 2011 2012

Dev

ices

(MM

s) DVR + DTV TAMMacrovision SOM

Weekly Y/Y TV Growth

-30%

-20%

-10%

0%

10%

20%

30%

40%

1/5

1/19 2/2

2/16 3/1

3/15

3/29

4/12

4/26

5/10

5/24 6/7

6/21 7/5

7/19 8/2

8/16

8/30

9/13

9/27

10/1

1

Y/Y

Gro

wth

%

Units Revenues

Source: Fast Track / The NPD Group

Tax Stimulus Checks Arrive

TAM forecast data has not been updated for recent trends; we expect growth in CE IPG in 2009 given secular trends but

economic situation is a temporary headwind

U.S.


CP & MR Opportunity

SAM (served available market): mainly STBs, DTVs, High-end DVD players, & Digital Picture Frames (DPFs) initially

SAM (connected devices) to ramp steadily as connectivity becomes a standard feature~20% CP SAM for 2012 reflects potential for low-end devices to remain unconnected

– Sony, by comparison, has publicly stated 90% of its devices would be connected by 2012

SOM – assuming the above SAM rates, these businesses could contribute over $100mm in 2012 revenueBut expect low volumes until 2010 as current design wins turn into shipping product

Source: TAM from ABI. SAM Macrovision internal estimates.

Connected Platform & Media Recognition TAM/SAM

0

200

400

600

800

1,000

1,200

2008 2009 2010 2011 2012

Tota

l Add

ress

able

Mar

ket (

Uni

ts in

M's)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

Serv

ed A

vaila

lbe

Mar

ket a

s a P

erce

nt o

f TA

M

DTVs STBs Digital Photo Frames Network Attached Storage

A/V Receivers DVR's (non-Service Provider) DVD-Video Players & Recorders AutomotiveDVD Based Games Consoles Portable Audio Players Connected Platform SAM % Media Recognition SAM %

In Design-Win Phase Until 2010, When We Expect Shipments to Become Sizeable


Entertainment Copy Protection Trends

Standard Definition market forecasted to decline at 5% CAGR but bundling provides fixed pricingACP/RipGuard is stabilizing through signing of bundled deals

– MPAA accounts for majority of revenue, remainder is from Independents (largely variable)

Blu-ray forecasted to eclipse Standard Definition DVDs after 201289% CAGR for BD shipments

BD+ penetration function of signing new studios Unlike ACP, BD+ royalty rates have potential to trend up based on service deployed

Per disc royalties based on service level & volumes plus authoring fees to embed BD+ in masterSources: Screen Digest, Futuresource, Macrovision estimates.

BD+ Growth Expected to Offset Declines in ACP Long-Term Worldwide BD & SD DVD Disc Volumes

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2008 2009 2010 2011 2012

Uni

ts (M

's)

0%

5%

10%

15%

20%

25%

30%

Pene

tratio

n R

ate

Blu-ray DVD'sStandard Definition DVD'sBD as a % of Total Discs (SAM)


Visibility

Source: Macrovision.

CE:– As long as our IPG patents remain, we would expect to be able to continue licensing– As long as ACP is supported by the industry, ACP will be embedded in devices

ACP is mandatory in both DVD and Blu-ray hardware and is widely adopted in VOD

Other:– Studios under long-term, fixed-fee agreements– When BD+ emerges, we expect it to ultimately track the Blu-ray market– Data licensing stickiness primarily a function of our ability to maintain our database competitiveness

% of Current Subscribers Under Contract

0%

20%

40%

60%

80%

100%

2008 2009 2010 2011 2012

% Subject to Renewals% Under Contract

>70% of the subscribers

currently covered by our license agreements are

contracted through 2012

Visibility is largely a function of patent duration & inclusion in standardsService provider

41% of Q3:08 revenue was

attributable to Service Providers


This assumes the midpoint of the estimates range of $460mm &

$500mm

Adjusted Pro Forma Estimates – 2008 & 2009

This assumes the midpoint of the estimates

range of $1.25 & $1.55

This assumes the midpoint of the estimates range of $185mm & $215mm; absolute

EBITDA growth higher than revenue growth due

to realization of synergies

Low tax rate due to TV Guide Magazine

divestiture

3-Year2007 2008F 2009F CAGR

Revenue $409 $445 $480 8%% Y/Y Growth 8%

COGS and Operating Expenses $292 $290 $280% of Revenue 71% 65% 58%

Adjusted EBITDA $117 $155 $200 31%% of Revenue 29% 35% 42%

Depreciation $17 $23 $20Operating Income $100 $132 $180

% of Revenue 25% 30% 38%Interest (exp) income and other, net (2) ($30) ($25) ($10)

Income before income taxes $70 $107 $170Tax rate 24% 23% 15%

Income tax expense (3)(4) $17 $25 $26Income from continuing operations $53 $82 $145

Shares Outstanding (5) 103 103 103EPS $0.52 $0.80 $1.40 64%

(millions except EPS)Adjusted Pro Forma (1)

Notes:(1) All forecasts are midpoints of ranges.(2) While the Company estimates between $350 million and $400 million in proceeds from the sale of the businesses classified as discontinued operations,sales proceeds of $350 million have been assumed with all proceeds being used as of January 1, 2007 to reduce the term loan issued in conjunction with the acquisition of Gemstar. Also assumes additional pay downs of $200 million on the term loan in May 2009 and $100 million on the high yield note in November 2009.(3) 2007 includes the elimination of $13 million in non-cash tax benefits from the reversal of discrete tax reserves.(4) 2008 includes the elimination of $15 million in non-cash tax benefits from the reversal of discrete tax reserves.(5) No changes are assumed for either shares outstanding or cash flow from financing related to equity issuance such as from ESPP or ESOP.


Target Model

Operating Margin Expansion Derived Through Low COGS

10-15% revenue growth driven by secular trends and new licensesHigh operating margins - minimal variable costs, non-capital intensive

Low COGS – primarily implementation services supporting launches (primarily IPG & CP)Low recurring R&D requirement inherent in patent licensing model

– But making sufficient R&D investments to drive new products & patent prosecutions

Long technology lifecycles/high ROI – Adopted as standard, e.g., BD+, ACP– Each patent lasts 20 years from filing

2008 2009 % of Revenue GrowthRevenue 100% 100% 100% 10-15%

Cost of Goods Sold 15% 15% 13%Gross Margin 85% 85% 87%

R&D 22% 21% 15%Sales & Marketing 19% 15% 15%G&A 14% 11% 10%

Total Opex 55% 47% 40%EBIT 30% 38% 47%

Depreciation 5% 4% 3%EBITDA 35% 42% 50% 15-25%

Long-Term TargetsAdjusted Pro Forma


Debt & Cash & Investments

Assumes $350mm in net divestiture proceeds go to pay down Term Loan in March 2009Company estimates between $350mm & $400mm in net divestiture proceeds

Assumes Term Loan is paid off completely in May 2009 & High Yield is paid off in November 2009

Projected Yearend Debt (ex. Leases)

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

2008E 2009E

Deb

t (00

0s)

Unsecured NoteTerm LoanConvertible Note

Projected Yearend Cash & Investments

$0

$100,000

$200,000

$300,000

$400,000

$500,000

2008E 2009E

Cas

h (0

00s)


Summary Investment Highlights

Compelling strategic combination of complementary solutionsGuidance + Connectivity + Metadata + Security

– Only independent purveyor of key pillars of Digital Media technology requirements

Strong competitive positionProven and growing patent portfolio with long remaining life

– Platform agnostic, highly extensible, addressing key growth areasProprietary metadata databases inform consumer amid sea of digital choices

– Must-have technologies, essential to offering complete solutionsIntegrated product offering

Broad customer footprintWell positioned to address growth opportunity from digitization of content

Estimates for 2009 exclude major catch-up payments, thereby reducing growth– 2007 & 2008 have included catch-up payments

Once catch-up payments normalize from comparisons, growth should reflect end-market trendsTargeting 10-15% CAGR growth long-term

– Long-term growth drivers include international expansion & new product extensions in growth markets

Attractive financial profileHigh operating margins and low capex lead to planned rapid de-levering and FCF growthHighly recurring revenue streams

Documents

Macrovision Overview - SNL · 1,300+ employees worldwide • $420mm+ annual revenue • ~4000 patents and patent applications • Recent acquisitions - Gemstar-TV Guide